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USD/JPY: not a trade for the faint-hearted in NY on Tuesday, news flows were two-way risk

  • USD/JPY: offered then bid on continuous conflicting news feeds.
  • USD/JPY back above key 111.03 level as stocks cheer Tax bill progress.

It has been a turbulent day in Washington and the FX space with USD/JPY catching a bid as the greenback recovers on news that the Budget Committee voted along party lines, 12 to 11, to approve the tax legislation which means it can now finally move on to the full Senate for a floor vote. Currently, USD/JPY is trading at 111.51, up 0.38% on the day, having posted a daily high at 111.66 and low at 110.93.

USD/JPY catches a bid despite N.Korean news

There had been some concerns that Democrats had abruptly pulled out of a planned White House meeting with Trump after he sent a tweet attacking them, while, also, some Senate Republicans were demanding changes to the tax bill. However, Senate Republicans finally emerged from a lunch at the Capitol with President Trump and were more optimistic that they were moving closer to an agreement on the path forward for passing their tax legislation. Despite the N.Korean news, USD/JPY rallied over 40 pips on the news and hit a fresh session high as stocks marched on to score record highs in the benchmarks.

S.Korean Military: N.Korea fired 1 ballistic missile from South Pyongan Province

The 10-year note benchmark struggled between 2.32% and 2.33% for most of the day, while the yield for the 30-year note also hovered around its previous close of 2.76%.

USD/JPY levels

Valeria Bednarik, chief analyst at FXStreet argues that the pair maintains its short-term bearish stance, given that in the 4 hours chart the price remains well below its 100 and 200 SMAs, with the shortest accelerating south below the largest, while technical indicators head marginally lower within neutral territory. "The pair would need to regain the 111.60 level to shrug off the negative stance, something quite unlikely in the current scenario," Valeria added. Meanwhile, a breakdown to 109.55 as the mid-September low is on the cards should the pair not be able to recovery above 113.00. 




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